By Aby Jose Koilparambil
Oct 21 (Reuters) - Asian currencies strengthened on Monday, with South Korea's won leading gains as hopes of progress on U.S.-China trade talks lifted appetite for risk assets, pressuring the dollar.
The dollar index .DXY, measuring the greenback against six major currencies, was little changed after falling more than a percent last week in its worst weekly performance in 17 weeks.
Broader sentiment was also underpinned by positive comments from China's top trade negotiator, Vice Premier Liu He, on Friday that the Chinese government will work with Washington to address each other's concerns, and that stopping the trade war would be good for both sides and the world.
The won KRW=KFTC led gains, putting on as much as 0.7% to its strongest since July 19.
"The Asian market is broadly reacting to movements in the dollar, which has remained weak of late. The Korean won has high beta to dollar movements and generally does well when the dollar weakens," said Mitul Kotecha, senior emerging markets strategist at TD Securities.
"Some of the key major risks have been sidelined for now following some progress on the U.S.-China trade negotiations and that is helping risk assets."
The Chinese yuan CNY=CFXS firmed as much as 0.2% after the country's central bank fixed the daily midpoint at its strongest in five weeks.
Separately, China's central bank unexpectedly kept its new lending benchmark rate unchanged on Monday, suggesting Beijing is keen to avoid overly loosening monetary policy for fear it may push up already-high debt levels across the economy.
However, the reaction to the lending rate decision was relatively muted in the regional currency market.
The Indonesian rupiah INR=IN, the Philippine peso PHP= and the Singapore dollar SGD= gained up to 0.2% each.
The Thai baht THB=TH and the Malaysian ringgit MYR=MY tacked on 0.1% each.
The Taiwan dollar strengthened 0.1% ahead of September export orders data, due later in the day.
Although Taiwan's Ministry of Economic Affairs is expecting a 6%-8.1% year-on-year decline in exports, there are hopes for a gradual recovery in the coming months due to the start of the year-end festive season and rising demand for new technologies including 5G technology.
Indian financial markets were closed on Monday for a holiday.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0607 GMT
Change so far in 2019
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Jacqueline Wong)
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